Michael Dell, chairman and chief executive officer of Dell Inc., speaks during the Oracle OpenWorld 2011 conference in San Francisco, California, U.S., on Tuesday, Oct. 4, 2011. Dell said last month that the company plans to continue with its current pace of acquisitions, buying eight to 10 companies a year. Photographer: Tony Avelar/Bloomberg *** Local Caption *** Michael Dell less

Michael Dell, chairman and chief executive officer of Dell Inc., speaks during the Oracle OpenWorld 2011 conference in San Francisco, California, U.S., on Tuesday, Oct. 4, 2011. Dell said last month that the ... more

Photo: Tony Avelar, 916997

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In 1999, Michael Dell visited the University of Texas dorm room where he launched his business 15 years before. Dell redefined how PCs were built and sold, but its innovations no longer set it apart.

In 1999, Michael Dell visited the University of Texas dorm room where he launched his business 15 years before. Dell redefined how PCs were built and sold, but its innovations no longer set it apart.

Photo: HARRY CABLUCK, STF

HP, Dell fight to stay relevant

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These words originally were written on an iPad using a Bluetooth keyboard and an app.

Then they were transferred to the cloud via WiFi. Only then did I download them to my grandpa box at the office so they could be put in the paper.

I'm not offering this glimpse inside the sausage factory of daily journalism to impress you with my technological prowess.

In fact, the technology's advance increasingly feels like a train I'm chasing and can't quite catch.

They lead the country's two biggest personal computer makers, Hewlett-Packard and Dell, yet the gap between their once-pioneering businesses and what is now the technology industry grows ever greater.

PC shipments slid 8.3 percent in the third quarter from a year earlier, according to Gartner, a market researcher, and they're expected to decline for the full year for the first time in more than a decade.

Whitman, in particular, is getting left on the tracks, battling declining sales as she struggles to stabilize HP and steer it into the mobile age. That effort took another hit last week with the embarrassing revelation of accounting improprieties in its Autonomy division, a software operation it bought a year ago. As a result, HP will take an $8.8 billion charge, wiping out much of the acquisition's value.

The write-down comes on the heels of another big bungle - the $11 billion write-down in August for Electronic Data Systems, which HP bought in 2008.

Both focus on goodwill, an accounting term for what most of us would refer to as added value. It's the intangible worth that the acquisition brings in excess of its assets.

HP is now saying that two of its biggest deals in the last few years essentially don't have any added value for the company.

As disturbing as the news is, it speaks to a far bigger problem. HP is trying to buy relevance, grasping for a purpose in an industry it once defined but which it no longer dominates.

It hasn't helped that its board and top management have been in disarray for years, further inhibiting a cohesive strategy. In fact, some investors began questioning last week whether the Autonomy write-down was designed to mask bigger boardroom mistakes.

Sales dropping

While it's lacked HP's turmoil, Dell, too is battling marginalization. The Round Rock company was never an innovator of design, but it redefined the industry in terms of efficient manufacturing.

Now, those innovations no longer set it apart. Dell is battling declining sales, which, like HP, it's sought to offset through acquisitions that have done little to stem the slide.

HP's shares are now trading at a decade low, and Dell's are selling at about the same level as three years ago.

To put the latest woes in perspective, HP's Autonomy write-down came just weeks after former employees of Comaq Computer Corp., which HP bought in 2002, gathered in Houston to commemorate the distant past.

The only thing missing was the company itself.

Compaq, much like Dell and HP today, once defined an industry, and then clung to that definition as if dominance were a substitute for innovation. When Dell redefined how PCs were built and sold, offering custom designs and shipping them directly to customers, Compaq couldn't adapt. It was still making money by building PCs one way and selling them through retailers. It needed to develop a build-to-suit business, but it couldn't turn its back on the revenue from "the channel."

Dependent on the past, it couldn't leap to the future, and so Dell surpassed it, and Compaq became another tombstone in the technology graveyard.

Like typewriters

HP is now reliving Compaq's nightmare. It, like Dell, finds itself fighting over a technology's buggy whips - those desktop boxes that remain in offices much as electric typewriters lingered in the workplace long after Compaq and Dell helped define their obsolescence.

The innovators of yesterday find themselves left on the tracks, watching as the future moves away from them.

Loren Steffy, loren.steffy@chron.com, is the Chronicle's business columnist. His commentary appears Sundays, Wednesdays and Fridays. Follow him online at blog.chron.com/lorensteffy, www.facebook.com/LorenSteffypage and twitter.com/lsteffy.